Engaging Gen Z in Your Company’s Retirement Plan

As Generation Z (born between 1997 and 2012) becomes a bigger part of the workforce, plan sponsors should consider adapting their approach to retirement plan engagement. Unlike previous generations, Gen Z has distinct financial attitudes and expectations, shaped by technology, economic uncertainty, and social change.

This article explores how plan sponsors can effectively engage younger employees in their company retirement plans by understanding their unique characteristics, leveraging technology, and tailoring communication and incentives.

Financial Attitudes and Savings Habits

Generation Z is the most digitally native, diverse, and socially conscious generation to date. Having grown up with smartphones, social media, and on-demand information, they expect instant access to resources and personalized experiences. Financially, many Gen Z employees are cautious due to witnessing economic downturns, student debt crises, and rising living costs. Their financial attitudes and savings habits include:

Skepticism toward traditional retirement plans: Unlike previous generations, Gen Z is very unlikely to rely on pensions or Social Security. However, while 66% of Gen Zers saving for retirement use 401(k) plans, only one in five are setting aside money for retirement at all.

Emphasis on financial independence: They prioritize financial security and independence, with many aiming to achieve early financial freedom rather than following traditional retirement timelines.

Preference for digital solutions: Gen Z favors mobile-first solutions, automated savings tools, and user-friendly investment platforms that align with their tech-savvy nature.

Distrust of long-term commitments: Many young employees are hesitant to commit to long-term financial plans, preferring flexibility and short-term financial goals.

Socially responsible investing: This generation values ethical and sustainable investing, preferring companies that align with their social and environmental values.

7 Strategies for Engaging Gen Z

Consider the following strategies to help build engagement among your younger workers and foster greater appreciation for your retirement benefit offering:

1. Embrace Digital Platforms
Gen Z is the first generation of true digital natives. They're accustomed to seamless, intuitive digital experiences:

• Mobile-friendly interfaces: Ensure that all retirement planning tools are optimized for smartphones. Apps that allow them to check balances, adjust contributions, and project future savings on the go make engagement effortless.
• Interactive tools: Offer simulations and calculators that visualize how different contribution levels or investment choices impact their retirement nest egg.
• Virtual reality (VR) experiences: Consider innovative approaches like VR to illustrate retirement scenarios, making the abstract concept of the future more tangible.

2. Personalize Communication
Traditional email campaigns and generic brochures may not resonate with Gen Z as effectively as other methods. Gen Z expects personalized, relevant content:

• Tailored messaging: Use data analytics to send customized recommendations based on their employment stage, financial situation, and interests.
• Leveraging social media: Engage them through platforms they frequent, such as Instagram and X. Share tips, success stories, and updates via these platforms, using engaging visuals and concise messaging.
• Peer influence: Highlight testimonials from colleagues or influencers they admire to build trust and relatability.

3. Focus on Financial Wellness Education
Many Gen Z employees are entering the workforce with student debt and a limited understanding of financial planning. Offering the following can help build knowledge and increase their confidence in planning for their financial future:

• Interactive workshops: Host webinars or live Q&A sessions covering topics like budgeting, investing basics, and the importance of early retirement savings.
• Accessible resources: Provide easily digestible content—such as short videos, infographics, or podcasts—that they can access anytime.
• Mentorship programs: Connect them with financial advisors or seasoned employees for one-on-one guidance.

4. Align with Social and Environmental Values
Gen Z is socially conscious and wants their money to reflect their ethics:

• Sustainable investment options: Offer Environmental, Social, and Governance (ESG) funds that invest in companies with sustainable practices.
• Transparency: Clearly communicate how and where funds are invested, reinforcing trust and alignment with their values.
• Community impact initiatives: Integrate programs that allow them to allocate a portion of their retirement funds to socially responsible projects.

5. Incorporate Flexibility
Rigid, one-size-fits-all plans may not appeal to a generation that values flexibility:

• Roth contribution options: Offer a Roth contribution option and educate them on the potential benefits versus the traditional pre-tax contribution option.
• Portability: Ensure that they understand that their retirement accounts are easily transferable, accommodating the likelihood of career changes.

6. Engage Through Gamification
Make retirement planning engaging by turning it into a challenge or game:

• Rewards systems: Introduce points or badges for reaching savings milestones or participating in educational programs.
• Friendly competitions: Organize team-based savings goals with small incentives to foster community and motivation.

7. Address Immediate Needs and Concerns
Understanding their current financial pressures is key:

• Student loan assistance: Offer programs that help manage or pay down student debt, which can free up resources for retirement savings.
• Emergency savings options: Implement features that allow them to build an emergency fund within their retirement plan, providing a safety net that encourages participation.

By combining technology, personalization, and social responsibility, retirement plan sponsors can create programs that not only engage Gen Z employees but also empower them to take charge of their financial futures.

Beyond Retirement: Holistic Financial Well-being

Plan sponsors may also want to consider how integrating overall financial wellness into the benefits package could further engage Gen Z:

• Comprehensive planning tools: Offer platforms that help with budgeting, debt management, and saving for other goals like homeownership.
• Health and wellness synergy: Connect financial health with physical and mental well-being programs, highlighting the interconnectedness of overall wellness.
• Continuous feedback loops: Encourage regular feedback from Gen Z employees to adapt and evolve offerings that meet their changing needs.

By proactively addressing these areas, sponsors not only enhance participation rates but also build a loyal, motivated workforce.

Final Thoughts

Engaging Generation Z in company retirement plans requires a shift in strategy that embraces technology, flexibility, and personalized communication. By understanding their financial mindset and leveraging digital tools, plan sponsors can successfully encourage young employees to invest in their future. Taking proactive steps to educate, incentivize, and offer meaningful investment choices will ensure higher participation and long-term financial well-being for Gen Z workers.

Informational Resources: Empower: “Meeting the Retirement Needs of Gen Z” (March, 2023); Congruent: “Keeping Up with Gen Z: Modernizing 401(k) Plan Administration” (March 22, 2024); PLANSPONSOR: “How Social Media Influences Plan Sponsors’ Participant Communications” (May 9, 2023); TIAA Institute: “From Gap Years to Golden Years: A Look at Gen Z’s Current Thinking About Retirement” (September 26, 2024); Reward and Employee Benefits Association: “How Employers Can Help Gen Z Engage in Pension Planning” (September 25, 2024).